FMAP extension: An investment and a money-saving venture

By Jim Frederick

WHAT IT MEANS AND WHY IT'S IMPORTANT In these times of trillion-dollar spending bills and massive deficits, $16 billion may not seem like all that much. But it’s enough to throw another critical lifeline to states coping with the ever-rising costs of Medicaid health assistance to the poor and unemployed –– and to thousands of community pharmacies that have to provide prescription services to those millions of Americans.

With the support of both Maine’s Republican senators, Congress moved with uncharacteristic haste over the past week to pass a $26.1 billion supplemental spending bill, and the president immediately signed the measure into law. With that additional cash infusion, the states will share another $10 billion in federal money to prevent more layoffs of teachers. They’ll also get $16.1 billion to extend, until June 30, 2011, the enhanced federal medical assistance percentage known as FMAP.

It means that state Medicaid programs will have additional funds to cope with the flood of suddenly impoverished and out-of-work Americans whose jobs –– and employer-provided health benefits –– have gone up in smoke during this relentless economic maelstrom. In the words of the National Community Pharmacists Association, “The bill avoids the repercussions of allowing FMAP assistance from the American Recovery and Reinvestment Act of 2009 to end on Dec. 31, 2010. With states experiencing continued losses and tax revenue and being obligated to balance their budgets, Medicaid cuts are in the offing without this extension.”

Those cuts, said NCPA’s acting EVP and CEO Doug Hoey, would “not be financially sustainable” for independent pharmacies “already working off of slim profit margins and that tend to serve a high percentage of Medicaid patients in underserved areas. For some, it would mean deciding to either limit or stop providing care to Medicaid patients altogether, which is the last thing that should be happening as the high rate of unemployment and underemployment forces more Americans to enroll in Medicaid.”

The $16.1 billion extension is also an investment, said Hoey and Steve Anderson, president and CEO of the National Association of Chain Drug Stores, in reducing longer-term healthcare costs for those Medicaid beneficiaries. “Anything that hinders pharmacy access is counterproductive,” said Anderson, “because when patients do not take their medications correctly health suffers and long-term healthcare costs rise.”

Hoey agreed. “The money saved by cutting reimbursements to pharmacies in the present will be washed away in the future by more costly health care options having to be pursued by Medicaid patients,” he said.

The emergency spending bill also contains a lesser-known provision that Hoey said also will save state governments money long-term. “Also included was a new Average Manufacturer Price provision for generic prescription drugs,” NCPA noted. “It allows drug manufacturers to include non-retail pharmacy prices when calculating AMP for inhalation, infusion, instilled, implanted, or injectable drugs if they are not generally dispensed through retail pharmacies. As a result, states can collect manufacturer rebates on these drugs that are estimated to save $2 billion over 10 years.”